Adoption of Advanced Technologies Was Associated With 11.4 Percent Higher Labor Productivity in 2016–2018
Source: Daron Acemoglu et al., “Automation and the Workforce: A Firm-Level View from the 2019 Annual Business Survey,” U.S. Census Bureau Center for Economic Studies Working Paper Series, no. CES-22-12 (April 2022, revised November 2022).
Commentary: A recent paper by Daron Acemoglu and coauthors examines 300,000 employer businesses’ responses to the 2019 American Business Survey. Specifically, the paper analyzes data on respondents’ adoption of five advanced technologies between 2016 and 2018: 1) artificial intelligence, 2) robotics, 3) dedicated equipment, 4) specialized software, and 5) cloud computing. It finds that firms that adopted at least one of these technologies had labor productivity rates 11.4 percent higher than those of non-adopting firms when accounting for industry, firm size, and firm age. This figure increases to 21.2 percent for firms adopting all five technologies.
Adoption of these technologies was particularly high in education, finance and insurance, healthcare, the information sector, manufacturing, and professional services. Adoption was also positively correlated with firm size since larger firms are better positioned to pay the up-front fixed costs and take advantage of the economies of scale associated with these technologies; it was negatively correlated with firm age, which suggests that organizational barriers play a role in adoption. Though firms reported ambiguous changes to employment from adoption, they cited increased demand for higher-skilled labor. Thus, adoption appears to not affect the aggregate quantity of labor demanded so much as the type of labor demanded (high-skill vs. low-skill).
